Asian Stocks Plunge on Credit Concern

Asian stocks tumbled, driving the Nikkei 225 Stock Average to its biggest drop since October 1987, on concern the credit crisis will topple more banks and slowing growth will cut demand for exports.

The MSCI Asia Pacific Index fell 7.4 percent to 91.42 as of 7:39 p.m. in Tokyo, the biggest drop since April 2, 1990, and bringing its decline this year to 42 percent. Financial stocks contributed the most to the index's drop.

Japan's Nikkei 225 Stock Average lost 9.4 percent to 9,203.32, the most since global markets crashed in October 1987. Toyota Motor Corp. slumped after Nikkei English News said profit may drop and after the dollar slumped versus the yen.

The Hang Seng tumbled 8.2 percent as Hong Kong's monetary authority cut interest rates in an effort to keep the credit crisis from spreading. Australia's S&P/ASX 200 Index declined 5 percent as consumer confidence fell the most in two years.

Shares dropped across Asia, extending a global sell-off fueled by the deepening credit crisis, which has wiped out more than $5 trillion of market value in the past week.

Indian stocks fell, with the benchmark Sensitive Index at a two-year low, on concern the credit crisis will topple more banks and slow global growth. The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 366.88, or 3.137 percent.

Russian authorities closed the Micex Stock Exchange for two days as a new $36 billion injection into the banking system by President Dmitry Medvedev failed to halt the country's biggest stock collapse since 1998. The Micex Index plunged for a sixth day, falling 14 percent to 637.87, the lowest level in more than three years, before trading was halted at 11:05 a.m. in Moscow

European equity markets pared early losses on Wednesday, but failed to climb into positive territory even after a number of the world’s central banks unveiled co-ordinated rate cuts to quell the deepening financial crisis.

In mid-morning trade, the FTSE Eurofirst 300 touched a five-year low but trimmed losses to hover 2.2 per cent lower at 981.38 after midday. Frankfurt’s Xetra Dax shed 2.4 per cent to 5,199.67, the CAC 40 in Paris lost 1.9 per cent to 3,662.92 and London’s FTSE 100 shed 0.5 per cent to 4,580.1.

U.S. stock-index futures climbed and European shares pared declines after the Federal Reserve and five other central banks cut interest rates in a coordinated bid to unlock credit markets.

Morgan Stanley climbed 7.6 percent and UBS AG advanced 3 percent after the Fed, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point. The Bank of Japan, which didn't participate in the move, said it supported the action. Switzerland also took part. Separately, China's central bank lowered its key one-year lending rate by 0.27 percentage point.

Efforts by governments around the world to restore confidence in the banking system have failed to unlock credit markets and stem share declines that sent the MSCI World to the lowest level since August 2004 earlier today. The cost of borrowing in dollars overnight in London soared for a third day and European money-market rates climbed to records before the central banks' announcement.

TradingEconomics.com, Bloomberg10/8/2008 5:44:37 AM

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